Termination of employment is a delicate decision, likely to have significant repercussions on both the professional and personal levels of the individual concerned. Under Moroccan law, unfair dismissal is strictly regulated. When an employee is unfairly dismissed, he or she is entitled to compensation for the sudden loss of his or her job. The way in which these indemnities are determined remains a frequent question. This article sets out to answer that question.
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- What is unfair dismissal in Morocco?
In Morocco, dismissal is considered abusive when the employer fails to comply with the legal provisions set out in the Labor Code. Among the justifications perceived as abusive are dismissal without real and serious cause (serious misconduct), dismissal tinged with discrimination, and dismissal carried out without strict compliance with the prescribed procedural steps.
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- Legal severance pay
In the event of dismissal deemed unfair, the employee is entitled to compensation, the amount of which is determined on the basis of his or her length of service and remuneration. Here is a detailed explanation of how they are calculated:
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- Compensation in lieu of notice :
This indemnity corresponds to the remuneration the employee would have received had he or she continued to work during the notice period. The length of the notice period depends on the employee's length of service with the company.
The period and duration of notice are governed by laws and regulations, the employment contract, the collective bargaining agreement, internal regulations or customary practice.
Any termination of an open-ended employment contract without notice, or without the notice period having been observed in full, entails an obligation on the part of the party responsible to pay the other party compensation in lieu of notice equal to the remuneration the employee would have received had he remained at his post, unless this is due to serious misconduct.
The notice period for the unilateral termination of an open-ended employment contract, as set out in paragraph 2 of article 43 of the aforementioned law no. 65-99, is determined as follows:
For managers and similar staff, according to seniority :
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- Less than one year's seniority : One month.
- One to five years' seniority : Two months.
- More than five years' seniority : Three months.
For white-collar and blue-collar workers, according to seniority :
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- Less than one year's seniority : Eight days.
- One to five years' seniority : One month.
- More than five years' seniority : Two months.
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- Severance pay :
An employee with an open-ended employment contract is entitled to compensation in the event of unfair dismissal, provided he or she has completed his or her trial period with the company employing him or her.
The precise calculation of severance pay is as follows:
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- 96 hours of salary per year for the first five years of seniority ;
- 144 hours of salary per year for the period of seniority extending from the sixth to the tenth year;
- 192 hours of salary per year for seniority between the eleventh and fifteenth year ;
- 240 hours of salary per year for seniority exceeding fifteen years.
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- Damages for unfair dismissal :
In addition to the above-mentioned indemnities, the employee may also claim damages to compensate for the prejudice suffered as a result of the unfair nature of his dismissal. These damages are intended to compensate for the moral and material prejudice resulting from the unjustified termination of his employment contract.
The employee has the right to bring the matter before the competent court. In the event of a finding of unfair dismissal, the said court may order the payment of damages. These are calculated on the basis of an amount equivalent to one and a half months' salary for each year or fraction of a year of servicewhile observing a maximum ceiling of 36 months.
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- What elements are included in the salary?
Redundancy pay is determined on the basis of the average remuneration received by the employee over the fifty-two weeks (12 months) prior to termination of the employment contract, while ensuring that the salary taken into consideration cannot be less than the legal minimum wage established in accordance with legal provisions.
When calculating severance pay, it is important to consider not only the employee's basic salary, but also the various additional elements associated with it. Here is a detailed list of these elements:
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- Job-related bonuses and allowances :
This includes bonuses and allowances paid in direct connection with the employee's job. However, certain allowances are excluded from the calculation, in particular :
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- a) Allowances intended to reimburse costs or expenses incurred by the employee in the course of his work ;
- b) Responsibility allowances, with the exception of function allowances such as those allocated to team leaders or group leaders;
- c) Allowances for arduous or dangerous work ;
- d) Compensation for work performed in hazardous areas;
- e) Indemnities paid for the temporary replacement of an employee occupying a higher category position or for temporary or exceptional work, except those relating to overtime.
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- Benefits in kind :
Benefits in kind granted to the employee, such as housing or a company car, must also be taken into account when calculating severance pay.
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- Commissions and tips :
Commissions and tips received by the employee in the course of his or her duties are also included in the basis for calculating severance pay.
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- Calculation examples
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- Example 1: An executive with 3 years' seniority and a monthly salary of 20,000 MAD
Compensation in lieu of notice for an executive with 2 to 5 years' seniority :
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- Notice period: 2 months
- Monthly remuneration: 20,000 MAD
- Compensation in lieu of notice = 2 months x 20,000 MAD = 40,000 MAD
Severance pay for an employee with 3 years' seniority :
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- Seniority: 3 years
- Hourly wage: 20000/190 = 105.26
- Severance pay = 105.26 x 96 x 3 = 30,314.88
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 20,000 MAD x 3 = 90,000 MAD
Total compensation: 40,000 MAD (notice) + 30,314.88 MAD (dismissal) + 90,000 MAD (damages) = 160,314.88 MAD
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- Example 2: An employee with 7 years' seniority and a monthly salary of 10,000 MAD
Pay in lieu of notice for an employee with more than 5 years' seniority :
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- Notice period: 2 months
- Monthly remuneration: 10,000 MAD
- Compensation in lieu of notice = 2 months x MAD 10,000 = MAD 20,000
Severance pay for an employee with 7 years' seniority :
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- 96 hours of salary per year for the first five years: 96 x 5 = 480 hours
- 144 hours of salary per year for the 6 to 7 year period: 144 x 2 = 288 hours
- Severance pay = (480 + 288) x 10,000 MAD / 190 = 40,421.05 MAD
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 10,000 MAD x 7 = 105,000 MAD
Total compensation: MAD 20,000 (notice period) + MAD 40,421.05 (dismissal) + MAD 105,000 (damages) = MAD 20,000.00 (notice period) + MAD 40,421.05 (dismissal) + MAD 105,000.00 (damages) = MAD 105,000.00 (damages) 165,421.05 MAD
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- Example 3: A worker with 12 years' seniority and a monthly salary of 8,000 MAD
Pay in lieu of notice for a worker with more than 5 years' seniority :
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- Notice period: 2 months
- Monthly salary: 8,000 MAD
- Compensation in lieu of notice = 2 months x 8,000 MAD = 16,000 MAD
Severance pay for an employee with 12 years' seniority :
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- 96 hours of salary per year for the first five years: 96 x 5 = 480 hours
- 144 hours of salary per year for the period from 6 to 10 years: 144 x 5 = 720 hours
- 192 hours of salary per year for the 11 to 12 year period: 192 x 2 = 384 hours
- Severance pay = (480 + 720 + 384) x 8,000 MAD / 190 = 66,694.73 MAD
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 8,000 MAD x 12 = 144,000 MAD
Total compensation: 16,000 MAD (notice period) + 66,694.73 MAD (dismissal) + 144,000 MAD (damages) = 226,694.73 MAD
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- Example 4: Executive with 9 years' seniority and a monthly salary of 25,000 MAD
Compensation in lieu of notice :
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- Length of notice for 5-10 years' service: 2 months
- Compensation in lieu of notice = 2 months x MAD 25,000 = MAD 50,000
Severance pay :
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- 96 hours of salary per year for the first 5 years: 96 x 5 = 480 hours
- 144 hours of salary per year for the next 4 years: 144 x 4 = 576 hours
- Severance pay = (480 + 576) x 25,000 MAD / 190 = 138,947.36 MAD
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 25,000 MAD x 9 = 337,500 MAD
Total compensation: MAD 50,000 (notice period) + MAD 138,947.36 (dismissal) + MAD 337,500 (damages) = MAD 50,000.00 (notice period) + MAD 138,947.36 (dismissal) + MAD 337,500.00 (damages) = MAD 50,000.00 (notice period) 526,447.36 MAD
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- Example 5: Employee with 4 years' seniority and a monthly salary of 12,000 MAD
Compensation in lieu of notice :
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- Length of notice for 1-5 years' service: 1 month
- Compensation in lieu of notice = 1 month x MAD 12,000 = MAD 12,000
Severance pay :
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- 96 hours of salary per year for the first 4 years: 96 x 4 = 384 hours
- Severance pay = 384 x 12,000 MAD / 190 = 24,252.63 MAD
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 12,000 MAD x 4 = 72,000 MAD
Total compensation: MAD 12,000 (notice period) + MAD 24,252.63 (dismissal) + MAD 72,000 (damages) = MAD 1,000.00 108,252.63 MAD
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- Example 6: Worker with 15 years' seniority and a monthly salary of 9,000 MAD
Compensation in lieu of notice :
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- Length of notice for more than 5 years' service: 2 months
- Compensation in lieu of notice = 2 months x 9,000 MAD = 18,000 MAD
Severance pay :
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- 96 hours of salary per year for the first 5 years: 96 x 5 = 480 hours
- 144 hours of salary per year for the next 5 years: 144 x 5 = 720 hours
- 192 hours of salary for the last 5 years: 192 x 5 = 960 hours
- Severance pay = (480 + 720 + 960) x 9,000 MAD / 190 = 102,315.78 MAD
Damages for unfair dismissal :
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- Compensation = 1.5 months' salary per year of seniority
- Damages = 1.5 x 9,000 MAD x 15 = 202,500 MAD
Total compensation: MAD 18,000 (notice period) + MAD 102,315.78 (dismissal) + MAD 202,500 (damages) = MAD 18,000 (notice period) + MAD 102,315.78 (dismissal) = MAD 202,500 (damages) 322,815.78 MAD
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- Conclusion:
Dismissal, a serious act with multiple consequences, is strictly regulated by Moroccan labor law. The termination of an employment contract, when considered abusive by the employer, entails financial consequences for the employee, intended to compensate for the sudden loss of employment and the prejudice suffered. The complexity of calculating these indemnities, which combine various elements of remuneration and seniority, raises many questions. This article aims to shed some light on this crucial subject.
The definition of unfair dismissal in Morocco, as stipulated by the Labor Code, highlights situations where the employer has terminated the contract without respecting the legal provisions. Such situations may arise from unjustified gross misconduct, discrimination or failure to comply with procedures. Each of these cases requires careful analysis to ensure that the employee's rights are preserved, and that adequate compensation is granted.
Legal severance pay is calculated on the basis of the employee's length of service and remuneration. Compensation in lieu of notice, for example, is a function of this seniority and is based on the remuneration the employee would have received had he or she worked during the notice period. The precise amounts and durations are clearly set out in regulatory texts, ensuring a degree of predictability for the parties.
Severance pay, on the other hand, is based on a number of hours' salary per year of seniority, varying according to seniority brackets. This formula is designed to reward the employee's loyalty to the company and to compensate for the loss of employment in a progressive manner. In addition, damages for unfair dismissal, intended to compensate for moral and material prejudice, are added to the legal indemnities, reflecting the seriousness of the employer's abusive act.
The calculation of these allowances is complex, requiring careful consideration of the various elements making up the employee's remuneration. In addition to the basic salary, other elements such as bonuses, benefits in kind, commissions and tips are also taken into account. This diversity of elements requires particular attention to ensure that each employee receives fair and equitable compensation.
We have used a number of calculation examples to illustrate how these allowances can be determined for different employee profiles. These practical examples provide a better understanding of the methodology to be applied, and offer a concrete vision of the amounts that can be awarded.
It is essential to stress the importance of employees knowing their rights in the event of unfair dismissal. Only a well-informed employee will be able to assert his or her rights and obtain adequate compensation. Similarly, employers must be aware of their legal obligations and ensure that they respect the rights of their employees when they take the decision to terminate an employment contract.
In conclusion, calculating compensation for unfair dismissal in Morocco is a complex but necessary exercise to ensure social justice. Its aim is to protect employees' rights and compensate them for the harm they have suffered, while taking into account the specific features of each situation. It is therefore crucial for employees and employers to fully understand these mechanisms, and to seek assistance where necessary to ensure that labor law is applied fairly and equitably. Knowing and respecting these rules helps to establish a climate of trust between the parties, and to strengthen the bond of loyalty and mutual respect in the workplace.
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